National Newspaper Association

NNA gathers to fight ad tax

April 2, 2015

BY Tonda F. Rush

CEO | NNA

WASHINGTON—Newspaper executives from 24 states descended upon Capitol Hill in March to push back against proposals to tax advertising at the federal level by denying full expense deductions to advertisers.

Stopping the advertising tax was the top priority of the National Newspaper Association’s 2015 We Believe in Newspapers Leadership Summit.

Megan Brennan, the newly named 74th postmaster general, also directed attendees’ attention to the Postal Service’s need for legislative assistance. Brennan told publishers that the congressional mandate upon USPS to prepay its retiree health benefits, which costs about $5.5 billion a year, is crippling the institution’s balance sheet. She called for all stakeholders to come up with common sense revisions in the postal laws and quickly move to resolution before Congress completes this year’s session and moves into the 2016 election year.

On the advertising tax, NNA’s partner in the Advertising Coalition, Jim Davidson of the Polsinelli law firm, told them that the proposal to tax advertising that was floated at the end of the 113th Congress remains a viable threat.

Both House and Senate leadership last year suggested that in its pending rewrite of the tax code—something that has not occurred since 1986—it could consider changing the way advertisers deduct their business expenses. It would permit a business to deduct only half of a current year’s advertising expenditures and require amortization of the other half more than 5 years (Senate version) or 10 years (House version.) The tax writers estimated the change in tax would raise $169 billion in federal revenues.

But Davidson said the loss of each ad dollar would cost about $22 in sales in the larger economy. He urged NNA members to remind their congressional delegations that the loss of sales would have an impact upon local economies. He said the advocates of the change think it would help to offset a new corporate tax rate for multinational corporations, setting up a classic counterpoint between Wall Street and Main Street.